Correlation Between NYSE Composite and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and ProShares Ultra at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NYSE Composite and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and ProShares Ultra Oil, you can compare the effects of market volatilities on NYSE Composite and ProShares Ultra and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NYSE Composite with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and ProShares Ultra.
Diversification Opportunities for NYSE Composite and ProShares Ultra
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and ProShares is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and ProShares Ultra Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Oil and NYSE Composite is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NYSE Composite are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Oil has no effect on the direction of NYSE Composite i.e., NYSE Composite and ProShares Ultra go up and down completely randomly.
Pair Corralation between NYSE Composite and ProShares Ultra
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.62 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, NYSE Composite is 3.27 times less risky than ProShares Ultra. It trades about 0.24 of its potential returns per unit of risk. ProShares Ultra Oil is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,989 in ProShares Ultra Oil on August 26, 2024 and sell it today you would earn a total of 658.00 from holding ProShares Ultra Oil or generate 16.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. ProShares Ultra Oil
Performance |
| Timeline |
NYSE Composite and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
ProShares Ultra Oil
Pair trading matchups for ProShares Ultra
Pair Trading with NYSE Composite and ProShares Ultra
The main advantage of trading using opposite NYSE Composite and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, ProShares Ultra can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ProShares Ultra will offset losses from the drop in ProShares Ultra's long position.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| ProShares Ultra vs. ProShares UltraShort Oil | ProShares Ultra vs. ProShares Ultra Basic | ProShares Ultra vs. ProShares Ultra Financials | ProShares Ultra vs. ProShares Ultra Real |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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